Publications

Annual Report 2000-2001


NHB's Activities

Policy Changes
5.1 Changes in the Refinance Policy

5.1.1 Revision of ceiling on loan slab: Taking into consideration the general increase in the cost of inputs, the ceiling on loan slabs with regard to construction/acquisition of new dwelling unit as also up-gradation/major repairs which are eligible for refinance was increased. Refinance is now available to HFCs, SCBs, State Cooperative Banks (COB) and Scheduled Primary (Urban) Cooperative Banks (UCB) for loans upto Rs.15 lakh in respect of loan for construction/acquisition of new dwelling unit and Rs.5 lakh in respect of loan for up-gradation/major repairs. The ceiling on loan slabs is Rs.5 lakh in respect of loan for construction/acquisition of new dwelling unit and Rs.3 lakh in respect of loan for up-gradation/major repairs for ARDBs, ACHFS, Regional Rural Banks (RRB) and under Golden Jubilee Rural Housing Refinance Scheme.

5.1.2 Levy of Prepayment Charge: As per the existing policy, prepayment charge @1% is levied on the loan proposed to be prepaid for the unexpired period of loan. In view of the feedback received from primary lenders, this policy was reviewed and it has now been decided to calculate the levy on a yearly reducing balance method. Also, the prepayment levy to be payable to NHB by HFCs is independent of the fact as to whether prepayment levy is being charged by HFCs from their borrowers or not. The prior approval of NHB shall continue to be required in respect of proposal for sale/assignment of book debts and the prepayment arising therefrom. Prepayment to be made by HFCs due to any reason (other than repayment of adverse balance i.e. outstanding refinance exceeding the outstanding loans in respect of which refinance has been availed) would be subject to prepayment levy.

5.1.3 Substitution of Book Debts : In case of adverse balance arising in respect of individual housing loans, NHB may stipulate either substitution of book debts (in which situation primary lenders shall have to offer fresh book debts of individual loans aggregating the equivalent amount of adverse balance of about the same tenor) or may require the primary lenders to pay back the adverse balance amount.

5.1.4 Security for refinance to ACHFS : As per the refinance scheme, refinance to ACHFS is to be secured by charge on the assets of the ACHFS. Considering the risk associated with lending to cooperative sector institutions, this policy was revised and it was decided that the refinance to ACHFS might also be secured by guarantee of the respective State Government besides charge on the properties and assets of the ACHFS as well as of the primary society created in favour of NHB in a form acceptable to NHB. Further, it has been decided that in cases where the refinance is not secured by guarantee of the State Government, the applicable rate of interest will be 0.50% above the normal interest rate on refinance on all loan slabs.



Interest rate changes

5.2 Revision in Rates of Interest on Refinance in respect of Loans to Individual Borrowers

The Indian economy witnessed tumultuous changes in the interest rate scenario during the last couple of years. While the interest rates moved up during the third quarter of the year 2000 after RBI hiked the Bank Rate, it declined sharply in the first quarter of the year 2001after reduction in Bank Rate and CRR by RBI. The interest rate on NHB refinance also underwent continuous changes during the year. The following tables shows the changes in interest rate on refinance during the year 2000-01.

01-04-2000 to 25-09-2000

Rural Urban
Size of the housing loan Rates of interest per annum to be charged by
NHB to PLI NHB to PLI
For construction or acquisition of new dwelling units
Up to Rs. 50,000 10.00 11.00
Rs. 50,001 to 2,00,000 11.75 12.00
Rs. 2,00,001 to 5,00,000 12.00 12.00
Rs. 5,00,001 to 10,00,000 12.00 12.00
For up-gradation/major repairs.
Up to Rs. 50,000 10.00 11.00
Rs. 50,001 to 1,00,000 12.00 13.00

26-09-2000 to 14-03-2001

For construction or acquisition of new dwelling units
Up to Rs. 50,000 10.00 11.00
Rs. 50,001 to 2,00,000 11.75 12.00
Rs. 2,00,001 to 5,00,000 12.00 12.25
Rs. 5,00,001 to 10,00,000 12.00 12.25
For up-gradation/major repairs.
Up to Rs. 50,000 10.00 11.00
Rs. 50,001 to 1,00,000 12.00 13.00

15-03-2001 to 26-04-2001

For construction or acquisition of new dwelling units
Up to Rs. 50,000 9.50 10.50
Rs. 50,001 to 2,00,000 11.00 11.50
Rs. 2,00,001 to 5,00,000 11.50 11.50
Rs. 5,00,001 to 10,00,000 11.50 11.50
Rs. 10,00,001 to 15,00,000 11.50 11.50
For up-gradation/major repairs
Up to Rs. 50,000 10.00 11.00
Rs. 50,001 to 1,00,000 12.00 13.00

27-04-2001 onwards

Rural Urban
Size of the housing loan Rates of interest per annum to be charged by
NHB to PLI NHB to PLI
For construction or acquisition of new dwelling units
Up to Rs. 50,000 9.50 10.50
Rs. 50,001 to 2,00,000 11.00 11.50
Rs. 2,00,001 to 5,00,000 11.50 11.50
Rs. 5,00,001 to 10,00,000 11.50 11.50
Rs. 10,00,001 to 15,00,000 11.50 11.50
For up-gradation/major repairs
Up to Rs. 50,000 10.00 11.00
Rs. 50,001 to 5,00,000 11.50 12.50
PLI: Primary Lending Institution

5.3 Rates of Interest for Project Finance

In keeping with the general interest rate scenario in the country, the interest rates applicable to the different project financing schemes both under refinance and direct lending windows, were revised downwards during the year. The revised rates are as under:

Direct finance: The interest rate for Land Development and shelter projects and Housing Infrastructure projects has been fixed at 12.25% for loans secured by Government / Bank guarantees and at 12.50% for other acceptable securities. The interest rates for Slum Redevelopment projects has not been changed and remain at 8% for loans upto Rs. 50,000 and at 11% for loans between Rs. 50,001 and Rs. 1 lakh.

Refinance: With effect from July 1, 2000, the interest rates for LDSP for public agencies and HIP for public agencies, professional developers and cooperative housing societies have been revised to 12.50% whereas rates for LDSP for professional developers have been revised to 13.50% and for cooperative societies and rental housing to 13.00%. Interest rates in respect of LDSP and HIP applicable to public agencies were further reduced to 12.00% w.e.f. April 01, 2001.

5.4 Recovery

NHB raised demand for a total amount of Rs.813.12 crore on institutions who have availed of its refinance. The overdues as a percentage of demand raised during the year 2000-01 was 0.05% showing a recovery of 99.95%.

5.5 Promotion and Development

5.5.1 During the year under review, one HFC, viz., Happy Home Profin Limited, Chennai was deleted from the list of approved HFCs eligible for availing refinance assistance from NHB w.e.f. August 28, 2000. Subsequently, four new housing finance companies have been approved and have become eligible for NHB refinance. These HFCs are ICICI Home Finance Company Limited, Sundaram Home Finance Limited, Birla Home Finance Limited and Tata Home Finance Limited. Accordingly, as on June 30, 2001 there were 31 HFCs [excluding Hometrust Housing Finance Limited which has completed its merger with Housing Development Finance Corporation Limited (HDFC)] in the approved list, who were eligible to avail NHB refinance.

5.5.2 The Bank also revised its guidelines pertaining to refinance assistance to HFCs which enables HFCs to levy prepayment charges in case of prepayment of loans by the borrowers, provided the policy with regard to the same is duly approved by the Board of Directors of the concerned company. Besides, threshold limit for paid up capital / net owned fund of an HFC for being eligible to avail NHB refinance has been revised to Rs. 10.00 crore. HFCs already in the approved list of NHB which do not fulfill the criteria would be required to achieve the revised level of Rs. 10.00 crore by December, 2003.

5.5.3 Under the Bank's Guidelines for refinance support, HFCs were required to get their shares listed on recognised stock exchange(s) in India within a maximum period not exceeding four years of business operations. It has now been decided to delete this clause from the Guidelines for refinance support. However, the requirement of listing continues to be in force under the Bank's Guidelines for Equity Support to HFCs.

5.5.4 The Bank has also decided "in-principle" to subscribe to the present rights issues of Cent Bank Home Finance Limited and Vysya Bank Housing Finance Limited in 1:1 ratio.

5.5.5 As a part of its promotional role, NHB holds periodic meetings with Chief Executive Officers (CEOs) of Housing Finance Companies approved for its refinance assistance at regular intervals where issues pertaining to coordination between the housing finance companies and the regulatory body are discussed. During the year, the 14th meeting was held with the CEOs of approved HFCs on July 24,2000 to discuss certain issues relating to NHB (Amendment ) Act, 2000. The 15th meeting took place on February 26, 2001 where several macro issues relevant to the healthy growth of housing finance system in the country were discussed. Devastation caused by the earthquake in Gujarat on 26th January, 2001 and measures taken by NHB to provide relief to the affected HFCs also formed part of the deliberations.

5.5.6 The National Housing Bank, Canada Mortgage Housing Corporation (CMHC) and Crown Corporation of Canada signed an Arrangement of Cooperation on April 25, 2000. Recognising the role of CMHC in the development of the Canadian housing finance system, NHB undertook a number of initiatives under the bilateral cooperation projects between the Government of India and the Canadian Government through the Canadian International Development Agency (CIDA).Critical emerging activities such as mortgage insurance, securitisation, capacity building etc. had been identified as the areas of collaboration. The initiatives progressed during the year.

5.5.7 The International Finance Corporation (IFC), Washington- the outfit of the World Bank, had contracted a study to NHB for determining a Supervisory and Regulatory Framework for Housing Finance Institutions in Bangladesh under their Technical Assistance (TA) Programme. The objective of the study was to prepare a Report suggesting measures and recommendations that could lead to development of a supervisory and regulatory framework for promoting a competitive, integrated and market based housing finance system in Bangladesh. The terms of reference included suggesting a Government body to regulate housing finance, supervisory methodology for housing finance institutions, establishment of prudential norms for housing finance, regulations relating to property appraisal and debt recovery, conditions for taking deposits, feasibility of establishing refinancing possibilities and possibilities to expand mortgage insurance and the creation of monoline insurance for mortgages.

5.5.8 The team from NHB which visited Bangladesh held extensive discussions with various organisations dealing in housing finance. The team also had discussions with the Deputy Governor of Bangladesh Bank. The Report was submitted to IFC, Washington in November, 2000.

5.6 Regulatory and Supervisory Function

5.6.1 The National Housing Bank (Amendment) Act, 2000 - Modifying The Regulatory Role Of NHB

The NHB (Amendment) Act came into force on 12th June, 2000. In terms of Section 29A of the National Housing Bank Act, 1987 (as amended), HFCs in existence on June 12, 2000 were required to make an application to National Housing Bank (NHB) for obtaining Registration Certificate for commencement of or carrying on the business of housing finance institution. The existing HFCs were required to apply for registration within a period of six months. Till the stipulated time period, 149 HFCs had applied for registration with NHB and their applications are currently at various stages of scrutiny and processing. Further, NHB has also been empowered to issue directions relating to prudential norms applicable to HFCs.

5.6.2 Guidelines for entry of Housing Finance Companies (HFCs) into insurance business

In view of the opening up of the insurance sector for private participation, NHB issued guidelines for entry of HFCs into insurance business in July 2000 to facilitate their foray into the business in various ways. The guidelines primarily aim at ensuring that the business of an HFC associating with insurance business is not affected by the risks that may arise from it. Different sets of eligibility criteria - depending on the extent of the HFC's likely exposure to the risks of insurance business - have been prescribed and an HFC is required to get prior approval from NHB before entering into insurance business. The guidelines envisage three different ways in which an HFC can enter into insurance business, namely as an agent of insurance companies on fee basis without any risk participation, by setting up a joint venture insurance company and by making investment in an insurance company upto the specified extent.

A housing finance company registered with NHB and having Net Owned Fund (NOF) of not less than Rs. 5 crore as per the last audited balance sheet would be eligible to undertake insurance business as an agent of insurance companies on fee basis without any risk participation.

All HFCs registered with NHB and satisfying the following criteria will be eligible to set up a joint venture company for undertaking insurance business with risk participation, subject to safeguards-
* NOF of not less than Rs. 500 crores;
* CRAR of not less than 12%;
* Net Non-Performing Assets (NNPA) of not more than 5% of the total outstanding advances;
* Net profit continuously for the last three years;
* Satisfactory track record of subsidiaries of the HFC, if any; and
* Satisfactory regulatory compliance and servicing of public deposits, if held.

No HFC would be eligible to conduct such business departmentally. A subsidiary or a company in the same group of an HFC engaged in the business of housing finance or banking will not normally be allowed to join the insurance company on risk participation basis.

An HFC registered with NHB but not eligible as joint venture participant as per the above criteria, can make investments up to 10 per cent of its NOF or Rs. 50 crore, whichever is lower, in the insurance company. Such participation would be treated as an investment and should be without any contingent liability for the HFC. For being eligible to participate as investor in an insurance company, the HFC would be required to have CRAR of not less than 12%, NNPA of not more than 5% of the total outstanding advances and net profit continuously for the last three years.

5.6.3 Natural Calamities - Relaxation in the Guidelines on Prudential Norms
In terms of provisions of the Guidelines on Prudential Norms, an asset where terms of the loan agreement regarding interest and repayment have been re-negotiated or rescheduled after commencement of operations shall be classified as sub-standard or shall continue to remain in the same category in which it was prior to its re-negotiation or reschedulement as a doubtful asset or a loss asset as the case may be for at least one year of satisfactory performance under the re-negotiated or rescheduled terms.

It was decided in February, 2001 that where natural calamities impair the repaying capacity of a borrower, an HFC may reschedule the terms of the loan agreement regarding interest and repayment and such rescheduled loans need not be classified as Non-Performing Assets (NPAs). The asset classification of these loans would thereafter be governed by the revised terms and conditions and they would be treated as NPA on the basis of the revised period for which interest and/or installment of principal remains unpaid, as prescribed in the Guidelines on Prudential Norms. Any provisioning made prior to such reschedulement shall neither be written back nor adjusted against any provisioning requirements that may arise in future. The relaxation is likely to have a positive impact on reconstruction efforts in the areas affected by natural calamities.

5.6.4 Mailing list
During the year 2000-01, two (2) new companies were added and no company was deleted from the mailing list of HFCs maintained by NHB. As on June 30, 2001, there are 342 HFCs on the mailing list of NHB.

5.6.5 Show Cause Notices and Prohibitory Orders:
During the year under review, one HFC was issued show-cause notice for contravention of various provisions of the Housing Finance Companies (NHB) Directions, 1989 and one HFC was prohibited from acceptance/renewal of public deposits. The total number of HFCs who have been prohibited from accepting/renewal of public deposits stood at 33 as on June 30, 2001.

5.6.6 On-site and Off-site Supervision
Thirty-six HFCs were inspected during the year 2000-01 to assess their financial position and verify their compliance with the Directions and Guidelines on Prudential Norms issued by NHB. Many of the HFCs were intimated about the findings and advised to rectify the short comings. As a part of its off-site surveillance, the Bank obtained the prescribed statutory returns and other requisite information from a sizeable number of reporting HFCs which were subsequently analysed to check for ensuring compliance by the HFCs with Directions and Prudential norms.

5.7 Golden Jubilee Rural Housing Finance Scheme
5.7.1 In order to tackle the problem of growing housing needs and housing shortage in the rural areas of the country, the Hon'ble Union Finance Minister announced in his Budget speech for the year 1997-98, the formulation of the Golden Jubilee Rural Housing Finance Scheme(GJRHFS) by National Housing Bank. Launched on the occasion of the Fiftieth Anniversary of India's independence, the Scheme aims to address the problem of housing shortage in the rural areas through improved access to institutional housing finance which would enable an individual to build a modest house or improve or add to his existing dwelling unit in rural areas. The GJRHFS envisages lending in the rural areas with due regard to the commercial viability of the proposals as per the norms followed by the lending institutions. The Scheme is being implemented through Scheduled Public Sector Commercial Banks, Scheduled State Co-operative Banks, Regional Rural Banks (RRBs), dedicated housing finance institutions, viz. the Housing Finance Companies (HFCs) and the Apex Co-operative Housing Finance Societies (ACHFS), as also through the Co-operative Agriculture and Rural Development Banks (ARDBs).

5.7.2 Details of the targets and achievements for last 3 years and also the targets for 2001-2002, for the HFCs, Banks and Cooperative Sector Institutions, are as follows:


1998-99 1999-2000 2000-01 2001-02
Target Achieved Target Achieved Target Achieved Target
HFCs 38900 35266 60000 77389 75000 56392 88800
Banks 50000 25951 50000 37786 65200 84771 83100
Cooperatives 11100 64514 15000 26188 9800 17263 3100
TOTAL 100000 125731 141363 150000 158426 175000
% Achieved ----------- 125.73 ----------- 113.09 ----------- 105.62 -----------

5.7.3 NHB has been reviewing the performance under the Scheme by way of (a) quarterly information being reported by the primary lending institutions and (b) organising a series of zonal level review meetings on a periodic basis. Progress is also monitored at the State Level Bankers' Committees (SLBCs) which is an useful forum not only for monitoring progress of the Scheme, but also for helping to identify and overcome problems, if any, encountered in the implementation of the Scheme.

5.7.4 The GJRHFS was launched to provide refinance to eligible primary lending institutions in respect of their lending to individuals for construction/acquisition of new dwelling units and repair / up-gradation of existing dwelling units in rural areas as per the terms and conditions specified by the Refinance Scheme of NHB time to time. Under the scheme, NHB has disbursed Rs.95.40 crore, Rs.230 crore, Rs.239.60 crore and Rs.261.50 crore during the years 1997-98, 1998-99, 1999-2000 and 2000-01 respectively.

5.8 Handbook on Rural Housing and Infrastructure
In order to facilitate flow of credit for rural housing, it was envisaged to form a database on Rural Housing initiatives, particularly in the context of the Golden Jubilee Rural Housing Finance Scheme floated by NHB. A considerable amount of work in this area has been carried out at various levels in different institutions. It was, therefore, decided to bring all the relevant information at one place so that it becomes a comprehensive work of reference in respect of rural housing. NHB had sponsored a study pertaining to the preparation of a Handbook on Rural Housing and Infrastructure. The study was felt useful to the Bank as also to Housing Boards and State Developmental Agencies as a step in the direction of preparing a ready reference hand book on Rural Housing. The Central Building Research Institute (CBRI) at Roorkee has been entrusted with the preparation of a Technical Handbook on Rural Housing and Infrastructure by NHB.


5.9 Training
5.9.1 As a part of the training and developmental activities, NHB has been conducting training programmes for the personnel of Housing Finance Companies/Public Agencies etc. apart from providing design and faculty support to banks/HFCs for conducting training programmes. NHB's endeavour has been to design and conduct training programmes for the personnel of primary lending agencies engaged in providing housing finance viz. HFCs, scheduled commercial banks, ARDBs, ACHFS, Development Authorities, Housing Boards etc.

5.9.2 During the year, 5 training programmes were designed and conducted by NHB for the various institutions in the housing sector viz., HFCs, State Housing Boards and Development Authorities including one programme on Housing Finance in which officials from leading housing agencies in Bangladesh also participated. The programmes ranged from orientation programmes on housing finance to specialised programmes on Regulation & Supervision, Project Finance etc. Besides, a workshop on Securitisation for the core group of employees of an HFC was also conducted during the year.

5.9.3 Besides conducting these programmes, NHB also extended financial and design support to the National Cooperative Housing Federation of India (NCHF) for conducting four training programmes for the personnel of housing cooperatives. Financial support was also provided to National Centre for Management Development in Agriculture and Rural Development Banking (NCMDARDB) for conducting two training programmes for the officials of co-operative institutions and banks operating in the rural areas.

5.10 Securitisation
5.10.1 A mention was made in the last year's Report about the efforts of NHB in introducing securitisation of mortgages in the country. As the country's apex body in housing finance sector, NHB has been playing a lead role in development of an appropriate policy environment and operational mechanism for Mortgage Backed Securitisation. Considering that the secondary mortgage market in India has to be sustainable, NHB coordinated with a number of agencies/ professionals / regulators for evolving suitable securitisation structures based on a viable model for better acceptance.

5.10.2 The first mortgage backed securitisation deal was successfully placed in the market with National Housing Bank (NHB) acting as Issuer and Trustee to the proposed Special Purpose Vehicle (SPV) Trust. The pilot issue comprised 11,106 individual housing loans involving Rs.135.84 crore originated by Housing Development and Finance Corporation Ltd. (HDFC) and LIC Housing Finance Ltd. (LICHFL) in two separate tranches for HDFC and LICHFL individually. The issue size was Rs.103.54 crore. The issue was marketed with a coupon range of 11.35% to 11.85% on book building basis and was fully subscribed at 11.85%. The issue received good response from a wide range of institutional investors including Insurance Companies, Mutual Funds, Financial Institutions, and Commercial Banks. This issue marked the introduction of Secondary Mortgage Market (SMM) in the country.

5.10.3 After the successful placement of the first issue of mortgage backed securities in August, 2000, NHB entered into another agreement with the LIC Housing Finance Ltd.[LICHFL] and Can Fin Homes Ltd. [CFHL] in February, 2001 for securitisation of pool of mortgages originated by these two HFCs. The second issue of MBS comprised 8549 individual housing loans involving Rs. 137.62 crore originated by these two HFCs in the states of Karnataka, Maharashtra and Tamil Nadu of which LICHFL accounts for Rs. 74.23 crore and CFHL the rest. The issue size was Rs.91.69 crore which was fully subscribed by a wide range of institutional investors at 10.25%.

5.11 NHB's support to Gujarat Earthquake Victims
5.11.1 A devastating earth quake hit the Kutch region of Gujarat on 26th January, 2001 claiming thousands of lives and destroying wealth amounting to crores of rupees. The entire nation came forward to help rehabilitate the quake-victims. The severity of the quake and the damage caused also drew the attention of the international community. The National Housing Bank announced assistance packages for the quake victims. The Ministry of Finance, Government of India constituted a High Level Committee to assess quake losses. The Sub-Group of the High Level Committee consisting officials from NHB, State Bank of Saurashtra, Dena Bank, Bank of Baroda, Andhra Bank and National Bank for Agriculture and Rural Development (NABARD) visited the affected regions in the districts of Rajkot and Jamnagar during February 5-6, 2001. It was generally felt that the houses in the region were inadequately provided in terms of building material technology, design and construction. The region as a whole was ill-equipped for such disaster. Since the areas were largely dependent on agriculture and rural artisanship, no major industrial damage was reported. However, the consumption needs and repayment capacity of the agrarian borrowers have been adversely impaired by the quake. Since, by and large, the affected houses belonged to EWS/LIG category, a significant component of financial assistance for reconstruction might require to be in the form of grant/subsidies, rather than loans, in view of the income potentials of the affected people and the extent of damage. Based on its observations, the Sub-Group also suggested certain recommendations which are summarised below:

• There is a need for multi-agency approach inclusive of NGOs and corporates/industrial houses for short and long term provision of housing to the quake victims.
• The State Government can be a facilitator in terms of infrastructure provision, granting approvals, checking of land records and providing necessary certificates and enforcing building by-laws including the requirement relating to the earthquake resistant construction.
• As a short-term measure, sites may be provided for temporary shelter with basic infrastructure facilities.
• Keeping in view the cultural affiliation of the affected population, it is proposed that, if possible, the resettlement should take place on the same site.
• It is also proposed that the building materials which would go into the production of housing stock may be exempted from the excise and sales taxes which is expected to bring down the construction cost by 8-10%.
• Uniform constructions can be implemented through specialized housing construction agencies at the State/Central level and through Corporate Bodies with proven technical expertise.
• The subsidies are proposed to be provided in the form of capital or interest subsidies or both and may be raised from the grants/aids received.
• Besides, a separate programme under "schematic lending facilities" needs to be introduced for implementing reconstruction projects in the affected areas to contain high elements of subsidies and restrict the excessive use of funds for consumption purposes.

5.11.2 Besides, the Group also opined in favour of reschedulement of repayments without affecting the quality of assets and advocated graduated interest rates. Proposals were also made for free advisory services and setting up of 'single window' assistance and setting up of small building centres in remote villages which were envisaged to act as facilitation-cum-provision centres for speedy rehabilitation of quake affected villagers.

5.11.3 NHB announced a scheme for the affected people in Gujarat to facilitate construction of new units and repairs to the damaged houses for early rehabilitation of the families in the earthquake affected areas. The Scheme is being implemented through the Housing Finance Institutions, commercial banks and state public agencies.

5.11.4 As was mentioned in the earlier chapter, the Reserve Bank of India sanctioned a soft loan of Rs. 1000 crores to NHB for deployment towards the early construction of houses as well as the infrastructure network that suffered extensive damage due to the earthquake. The loans will be repayable over a period of 15 years. NHB will provide these funds to housing finance companies and scheduled banks through its refinance and direct lending schemes.

5.11.5 Under the refinance scheme of NHB, affected individuals could avail housing loan for acquisition/construction of new unit and/or for upgradation/major repairs up to Rs. 5 lakhs in rural and semi-urban areas, and up to Rs. 10 lakhs in urban/metropolitan areas from housing finance companies/scheduled banks at 8% per annum. NHB would provide refinance to housing finance companies and scheduled banks at 6.5% per annum.

5.11.6 In view of the large scale destruction of property and infrastructure, NHB will also be providing direct finance to State Government Agencies like State Disaster Management Authority, State Housing Board, State Development Authorities/Municipal Bodies etc. These agencies would be primarily engaged in construction of houses collapsed or damaged during earthquake and in providing for housing related infrastructure such as water supply, sanitation, roads, sewage etc. NHB would provide funds to these public agencies at 7.5% for all such projects undertaken by them.


5.12 Organisation
5.12.1 Change in Incumbency of Directors :

Section 6(1) (d )
Shri Vepa Kamesam, Deputy Governor, Reserve Bank of India in place of Shri Jagdish Capoor , w.e.f. July 4, 2001.

Shri K. Madhav Rao, Director, Central Board of Directors, Reserve Bank of India in place of Dr. A.P.J. Abdul Kalam, w.e.f. March 1, 2001.

Dr. A.P.J. Abdul Kalam, Director, Central Board of Directors, Reserve Bank of India in place of Dr. Bhai Mohan Singh, w.e.f. December 21, 2000.

Section 6(1)(e)
Shri Shekhar Agarwal, Joint Secretary, Ministry of Finance, Banking Division in place of Shri Devi Dayal, w.e.f. July 18, 2001.

Section 6(1)(f)
Shri Ravi Bhushan Budhiraja, Principal Secretary, Housing & Special Assistance, Govt of Maharashtra in place of Shri Vishwas S. Dhumal, w.e.f. November 20, 2000.

5.12.2 Meetings of the Board of Directors
The Board of Directors of the Bank met six times during the period from July 2000 to June 2001.

5.12.3 Meetings of the Executive Committee of Directors
The Executive Committee (EC) of Directors of the Bank met thrice during the period from July 2000 and June2001.

5.12.4 Audit Committee of Board
An Audit Committee of the Board comprising of four non executive directors of the Bank was constituted in June, 2000. The Audit Committee acts as an interface between the management and the statutory and internal auditors overseeing the internal audit functions. It reviews the annual accounts, the internal audit reports and compliance and also holds periodic dialogue with the statutory and internal auditors. The members of the Audit Committee met twice during the year. The strength of the Audit Committee has since been increased to five.

5.12.5 Visit of the Rajya Sabha Committee
A Rajya Sabha Committee on the papers laid on the House, visited the Bank on October 19, 2000. The CMD of NHB presented before them the current housing scenario as well as the problems being faced by the sector and the role of the Bank in promoting the housing sector in the country .

5.12.6 Staff-strength
During the year, the Bank undertook a fresh recruitment drive for appointment of officers in Scale-I. The Bank will be recruiting 12 officers to fulfill the sanctioned strength of officers in this Scale. The exercise is scheduled for completion in the year 2001-02. The total strength of officers in the Bank as at the end of the June 30, 2001 stood at 73 as against 79 at the close of previous year.

5.12.7 SC / ST / OBC (compliance with reservation policy)
The policy of the Government of India regarding compliance of matters relating to reservation policy has been strictly adhered to by the Bank. A cell under a liaison officer has been functioning in the Bank. In accordance with the directions of the Government of India, post based rosters are being maintained by the Bank.


5.13 Rajbhasha
5.13.1 National Housing Bank since its inception, has been constantly endeavouring for successful implementation and effective compliance of the Official Language Policy of the Government of India. The Bank has taken a number of steps to propagate use of Hindi in official work.

5.13.2 The Bank celebrated the 'Hindi Chetna Month' from 14 August, 2000 to 14 September, 2000 wherein various competitions were held. Shri PP Vora, CMD, awarded 11 officers under the various Hindi competitions and incentive schemes. He also distributed cash prizes, mementos and certificates to the winners. In addition, the Bank organized a Seminar on 'Possibilities to increase the use of Hindi in NHB'. During the Hindi Chetna Month, Hindi documentary films were also shown to Bank officers. Raj Bhasha Running Trophy was awarded to 'Department of Promotion & Development' for doing maximum work in Hindi.

5.13.3 During the year, Hindi Workshops on General & Technical subjects were also organized which proved very useful to Bank officers.

5.13.4 Banking Division, Ministry of Finance inspected Head Office of the Bank regarding progress in use of Official Language. Officers of the Bank's Official Language Department attended regularly the meetings convened by Rajbhasha Implementation Committee, Reserve Bank of India and Delhi Bank Nagar Rajbhasha Implementation Committee.